Everything You Need to Know About Investing On One Page

My biggest influence in investing, and the person I most admire in the financial world, is John C. Bogle, founder of Vanguard Mutual Funds.

My favorite Sunday morning comic strip is Dilbert, by Scott Adams, which pokes fun at corporate and office culture. 

Bogle and Adams, vastly different in age, style, and occupation have each enriched my life, but I could never have imagined any connection between the two.  Therefore, I was both surprised and intrigued while reading one of Bogle’s books to find a reference to some investment advice given by Adams.

The advice came from a book Adams wrote called Dilbert and The Way of the Weasel.  The shout out from Bogle was the highest of praise in my mind so I immediately went to the library and checked-out Adam’s book.

This is an actual book, not just a collection of Dilbert comics.  While Adams sarcastic sense of humor shines through, the book offers some serious and useful advice, albeit in a light-hearted manner.

I discovered from the book that Adams is a serious student of investing and at one time had considered writing a book geared towards the beginning investor.  Adams reports that, “After extensive research on all topics related to personal investing, I realized I had a problem.  I could describe everything a young first-time investor needs to know on one page.  No one wants to buy a one-page book even if that page is well written…”

So instead of writing a book on investing Adams devoted one page in Dilbert and the Way of the Weasel to the topic.  It was this advice that caught Bogle’s attention and earned his endorsement.

Adams’ conclusion that everything a beginning investor needs to know can be written on one page has intrigued me ever since I read it.  While it is probably true that no one wants to read a one-page book it occurred to me that one page is the perfect length for a blog post.  So with apologies to Adams for using his idea, here is my version of:

Everything You Need to Know About Investing On One Page

  • Reward is not possible without risk
  • You can’t beat the stock market
  • Over time almost no one else can beat the market either
  • Your best bet is to quit trying to beat the market and invest in low-cost index funds
  • Diversification is investing’s “free lunch”
  • Take full advantage of employer matching programs.  When someone offers to give you money to invest – take it!
  • Take full advantage of government-sponsored tax-advantaged retirement accounts (i.e. 401(k)s, IRAs, Roth IRAs, etc.)  Less money for the government means more money for you. 
  • Automate your investment plan (substitute technology for willpower) 
  • Keep your investment plan simple  
  • Focus on the things you can control.  These include:
    • The percentage of your income you invest
    • The way you allocate your investments between stocks, bonds, and cash
    • Investment costs
    • Your behavior (see below)
  • Behavior is more important than knowledge.  Avoid the following destructive behaviors:
    • Overconfidence
    • Loss aversion
    • Following the crowd
    • Impatience
  • Stay the course

Over the next several months I am going to write one or more blog posts on each of these bullet points.  I will try to keep the posts short, informative, and entertaining.  At the end of that time you will have the basic knowledge you need to be a successful investor.  This information could transform your financial life and I promise it will be well worth your time, so come along for the ride.  It’s going to be a lot of fun (and, yes, I really believe investing is a lot of fun).

 

17 comments for “Everything You Need to Know About Investing On One Page

  1. March 5, 2014 at 3:29 pm

    Love it! And crazy the two of them are connected like that – this was already a fun investing post to read 🙂

    • Brent Esplin
      March 5, 2014 at 4:09 pm

      Glad you enjoyed. And it is crazy. I never would expected Bogle to be quoting Scott Adams on investing.

  2. Kent Wise
    March 5, 2014 at 3:53 pm

    Brent you are giving awesome advice. I appreciate your weekly posts.

    • Brent Esplin
      March 5, 2014 at 4:11 pm

      Glad you are enjoying them, Kent. I enjoy learning about personal finance and investing and it would be a shame to keep what I have learned to myself when it is such useful information for everyone to know.

  3. Kirk Parks
    March 6, 2014 at 4:28 pm

    Enjoyed the post. I look forward to reading the posts the follow-up this one.

  4. March 10, 2014 at 6:56 am

    Brent,

    Just found you through Rockstar Finance and I really enjoyed this post! I’ve always enjoyed Dilbert and was extremely impressed with Adams after I read this article in the Washington Post a few months ago:

    http://www.washingtonpost.com/business/read-this-if-you-want-to-be-happy-in-2014/2014/01/02/d96370f0-7192-11e3-9389-09ef9944065e_story.html

    Between this and his simple investing philosophy, I am now an even bigger fan of his…

    • Brent Esplin
      March 10, 2014 at 7:58 am

      Thanks for sharing the article from the Post. I enjoyed it. I especially liked the comment towards the end about happiness being about the direction you are headed, not necessarily where you are. I have always believed that, and I think it is especially true in personal finance. Progress, in life and money, is the key. I have Adam’s latest book, “How to Fail at Almost Everything and Still Win Big” on hold at the library and I am getting close to the top of the list. I am looking forward to reading it. Thanks again for sharing.

  5. March 10, 2014 at 3:15 pm

    Wow, I had no idea they were connected – super interesting! I love this post. Simple and honest. Looking forward to reading your future posts on each of these bullet points.

    • Brent Esplin
      March 10, 2014 at 4:44 pm

      Thanks for the kind words. I am glad you enjoyed the post and hope you enjoy the rest. I was certainly surprised to find Bogle quoting the creator of Dilbert.

  6. Anonymous
    March 10, 2014 at 6:35 pm

    🙂 Love it thanks!!

  7. March 10, 2014 at 7:07 pm

    Awesome! I can’t wait to read all your upcoming posts! I also think that investing is a lot of fun too. 🙂

  8. March 11, 2014 at 8:27 am

    Nice summary of investment principles. It’s a succinct reference one can keep as a reminder. I also appreciate that you offered it in an entertaining way.

  9. March 12, 2014 at 9:57 am

    I think to sum up the last part of the article, is to say that one need to be emotionless and not to be affected by the market.

  10. March 29, 2014 at 7:34 pm

    Great article! “Automate your investment plan (substitute technology for willpower)”. That’s probably my favorite tip. I wish more people understood that nowadays, you don’t need willpower! You can set yourself up for retirement automatically.

    • Brent Esplin
      March 29, 2014 at 11:19 pm

      Glad you enjoyed it. Automating things is definitely important in managing money, and it has never been easier. Thank goodness for technology.

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